The assumptions: 1) Pair valuation (read: long term price action) is determined largely by fundamentals between a pair. 2) When pair fundamentals are unchanged for a period (GDP, inflation, employment, political stability etc), pair valuation reaches equilibrium and 'rangy' trading ensues. The theory: 1) A significant period of daily range trading should be accompanied by a concurrent period of relative 'equilbrium' between fundamentals 2) Breakout from a significant period of daily range trading should occur shortly after pair fundamentals exhibit a significant divergance from 'baseline' fundamentals witnessed during the range bound period. The implication is that new fundamental relationships between the pair drive a new valuation of the currency. Fundamental-based traders than battle with an entrenched range-bound market mentality, with fundamentals eventuallly winning out and a new trend then forming. For myself, this theory could be applied to a type of 'fundamental' based filter that would engage after a period of 1) daily rangy trading 2) that corresponds with unchanged pair fundamentals When fundamentals begin diverging a range bound period, entries for a trend following system can be put on. I dont have the computing skills to test this yet. But in theory, the idea should hold. Any ideaS? Suggestions? Contributions? Does the market hold to this theory, in your experience?